Is it far fetched to say that Uber's business is actually taking money from the rich and giving it back to the people?
The fact that it's failing doesn't change that purpose.
Is a mousetrap's business the giving of cheese?
What choice has Uber removed from the market so far?
What choice do you expect Uber to remove from the market even if they are maximally successful in their overall plan?
1. https://www.latimes.com/travel/story/2019-12-12/supershuttle...
According to the article below, in 2013 a medallion in NYC reached a cost of $1.3 million, but has crashed as low as $240k since Uber and Lyft started operating. The drivers that bought it when they were expensive are probably really struggling right now.
Uber and Lyft have since made it clear that the medallion is an unnecessary expense, so in a way it's a good thing, but meanwhile the drivers that bought into it are screwed.
https://www.cbsnews.com/news/how-much-is-a-nyc-taxi-medallio...
Last question is more relevant: there are vague suspicions of them planning to monopolize the market, but the bigger question is: whoever gave them $25 billion to piss away is expecting some solid returns on that investment, so they will need to find a way to extract that much, and more, from their users (on top of their current revenue stream). The concern is that it's hard to imagine a positive scenario of extracting that much money from a market that is getting pretty well established by now.
> What choice has Uber removed from the market so far?
> What choice do you expect Uber to remove from the market even if they are maximally successful in their overall plan?
I'm thinking of Meditations on Moloch from SSC (0). What Uber removed was 2 fold.
First, was that a gig worker could no longer be legal or not culpable (civil) regarding driving without appropriate licensure or insurance. The rates paid do not allow for the costs of a chauffers license, nor do they cover commercial insurance rates.
Secondly, Uber removed protections on riders with the first point, and by using the carrot of "we're cheaper than taxis". We saw this play out before, when there were no licenses for taxis. A whole lot of bad things happened, and the public demanded the licenses and checks to be instituted. Some places went way overboard ($1m medallions in NYC).
Uber and others are all the same - they wish to remove the checks and balances, cut a meager amount off the bill to customers, and extract money by running around the law until they can either change it or get shut down.
(0) https://slatestarcodex.com/2014/07/30/meditations-on-moloch/
Vehicle depreciation doesn’t meaningfully occur with every passenger mile, it piles up until you have a large repair bill.
Same economics as an unsafe, unregulated building site. Get paid cash under the table, pay no taxes, get no healthcare, make enough to get by, until you get sick or injured on the job, then you’re out and the next desperate person takes your place.
The invisible hand.
Do the rental companies also not understand depreciation?
By having an on demand workforce, they can fire (aka not schedule) much more easily. Consequently, they can also hire easily.
There's a non-negligible pool of people who hate job applications and interviews, but want a paycheck.
It's like running a shell game on the street, you let the first person win $20 so other people think it's possible then you scam all them. Except in this shell game we are also crushing small companies whenever possible.
If you go work for them, you are paid less than you were as a taxi driver.
Also- taxis provided a god-awful service who's pricing was only sustainable because of government regulation
Take toronto, ontario for instance. I've spoken to hundreds, and recruited hundreds of drivers, and ~85% of them speak very little english, have extremely few skills, and are in a position where they have to pay bills NOW, and can't afford to invest in themselves. Its sad, but they're trapped in a vicious cycle.
For an analogy, neoclassical-adjacent economics' take on international trade practices like dumping or export subsidies is pretty much what you said. EG, if China subsidizes toothbrush exports, the rest of the world gets subsidized toothbrushes at chinese taxpayers' expense. A similar point to the one you are making.
This argument is typically to counter the claim that export subsidies unfairly kill local production, and/or forces a subsidy war.
Riffing on David Graeber (the polar extreme, and not exactly an economist) somewhat... I'd interpret Uber's investor-subsidized losses differently. Investors haven't really lost much money so far, the stock price is fairly flat. They buy shares, and then they have those shares.
The shares themselves are a type of money which companies print. It is new money. Investor buys one share for $1. His net worth has not changed. Uber's bank balance has changed, and they can now fund another $1 of losses. As long as the share price holds, losses are offset by the new money (share) creation. It's that new money subsidizing rides.
On a less abstract note... I think it's important to remember that subsidies don't just transfer. They also create waste... which no one benefits from. For every $1 lost, consumers only gain a few pennies of value (utility in old timey economist speak) goes to consumers and/or drivers.
The whole reason that uber needs to subsidize rides is that consumers aren't consuming enough of them at "full price." That means they don't value rides at full price.
Interestingly, economists (also sociologists, historians, etc.) disagree agree on what money is.
For the purposes of this topic though... I think it's sufficient that marketable securities sit under "current assets" on a balance sheet, alongside "cash & equivalents."
Say an investor buys a new share in uber for $35. Her balance sheet isn't meaningfully changed. Uber's bank account has grown by $35. I'm not saying that the accounting doesn't work out. The $35 isn't counted as revenue, and doesn't impact earnings.
Still... $35 has now appeared in one account without disappearing from another.
Again, I'm not saying the accounting is dodgy. Theoretically, when you buy a $2 ice cream then you have a $2 ice cream and 2 fewer dollars. Your "balance sheet" nets the same amount. Same thing when a woodshop buys timber. But for most practical purposes in the modern economy, a company's "total assets" don't matter much. "Current assets" do.
Whether or not you want that money (or even currency) creation is interesting, but it works the same as money in practice. Gold, sovereign notes, bank bonds... Same result as shares.
Shares can be overpriced, but so can currency. It's besides the point, imo.
If you go out and buy a car solely to drive Uber, I still think you're in the black, as evidenced by the non-trivial amount of Uber drivers who are driving rented cars where the rental company is bearing any long-term costs and bundling them up for the drivers in weekly rentals.
Those drivers are then able to make an easy calculation of "what did I take in this week vs what did I pay out this week?" and I doubt they'd be doing it if that sum was negative or too small week after week, suggesting that when the car rental company's profits are taken out and held by the long-term car-owning drivers, that they should also be profitable.
The few startups I’ve interviewed at were full of very smart people who were very bored and spent their days finding the most complex way to implement web forms. I remember one explaining how they had implemented this insane distributed database that synchronized over the network so the text fields would be the same if you switched browsers half way through filling a form out.
I also don’t use travel agents anymore. Automating things isn’t bad, society not providing safety nets is the problem.
It's the most literal form of "a race to the bottom".
The point is blaming a business for trying to lower costs and stay competitive is asinine. If the problem is people aren’t qualified to do work or are unable to feed/house themselves, that is for the government to address since they have the power to tax. No individual business can solve this problem.
Go ahead and let the businesses profit. And if you need to tax 90% of the profit to provide a minimum standard of living for your citizens then so be it.
There is no reason a business has any responsibility to its employees outside of paying them for services performed in accordance with labor laws.
Yes there is. Work is not just writing a paycheck and be done with it. It's more than that: it's working together towards a future that is better for all parties, in a sustainable way.
"yes sir, he says he really does"
"jolly good"
Misquoted, but accurate in spirit. I must have fruit.
“What awful people.”
1. Executives 2. Venture capitalists
And who "the people" are here:
1. Riders 2. Drivers
Right off the bat, the entire business model is moving money from riders to drivers, while siphoning off a percentage for the rich. So at a fundamental level, the purpose of the company is to use moving money around between the people as a reason to move money from the people to the rich--the exact opposite direction of what you're proposing.
But that's the gross effects, and one could argue that what matters is the net effects. It's possible that while the rich are taking from the people here, these particular rich are taking less than other rich would be. I would argue that "taking less" and "giving" are not the same thing, but I'll at least entertain the point that the net effect might be positive for the people.
To analyze that we have to look at our two "the people" groups separately:
1. Uber's fares are significantly lower in most places than taxis were previously. But we have to realize that this is a temporary anomaly caused by competition with Lyft et al--Uber is using their massive funding to undercut competitors and drive them out of business. If that happens (which is probably will) Uber will have no competitive pressure to keep their prices low. In fact, following incentives, Uber should probably start buying up taxi medallions and then reverse their stance on how those rules should be enforced, so they can pull the ladder up behind them. But even without that, Uber has significant first-to-market advantages that will make it hard for a competitor to arise. Any competitor would have to be global, otherwise Uber will just use their global profits to undercut them on price locally. And a starting a global business has significant technical challenges, which Uber didn't have to deal with because they started locally. There are also legal challenges, which Uber didn't have to deal with up front, since Uber invented loopholes, many of which are now closed. And as a last line of defense, Uber can just keep enough cash on hand to buy out any competitors that arise (similar to Facebook's purchases of Instagram, Giphy, etc.). Whatever benefits Uber provides to riders, are short game: their long game isn't running a rider-focused charity.
2. The data regarding drivers is rife with issues. First off, the results are uneven: some sources say that Uber drivers in New York and San Francisco are making more net profit than they were as taxi drivers, but that effect drops off as you move toward smaller cities and moves well into the negative in more rural areas. And there are good reasons to believe that the benefits of a taxi company are being undervalued in these comparisons: health insurance and mechanic services are priced lower for a taxi service because they have collective leverage: an individual seeking health insurance or a mechanic pays a higher price. And hourly wages don't include the extra time a gig driver has to spend finding parking, getting repairs done, etc., due to not having a taxi garage. These are hours that they work but don't bill for, which aren't included in stats. It would be hard to argue that drivers are better off with the current system. The simplest truth is if you just talk to drivers: the positive thing I hear from drivers is that they don't have cash in their cars so they aren't as likely to get robbed, but most who I've talked to say they have to work more to make the same money. And finally, this is again a temporary concession: Uber is doing their best to replace human drivers with self-driving cars. Even if you disagree with me that net results are worse for drivers, any net benefit you can claim is temporary.
And there are even more fundamental questions: What are the network effects on local economies of taking a percentage of all driver transactions in the world and sending it to San Francisco? Should we be weaving cars into the transportation infrastructure of our cities when bikes and public transit have such clear benefits? Is it worth it to give up your location privacy for a cheap ride?